Calcutta H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that in computing the penalty leviable under s. 271(1)(a) of the IT Act, 1961, the two sums of Rs. 8,433 each paid on December 30, 1970, and March 29, 1971, respec tively, should be construed as ‘sums paid in advance under Chapter XVII-C’ within the meaning of the Explanation to cl. (i) of the said section ?

Counsel Appeared

Ram Chandra Prasad, for the Revenue : R.N. Dutt, for the Assessee

SUHAS CHANDRA SEN, J.:

The following question of law has been referred to this Court under s. 256(1) of the IT Act, 1961 (“the Act”), at the instance of the Revenue :

“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that in computing the penalty leviable under s. 271(1)(a) of the IT Act, 1961, the two sums of Rs. 8,433 each paid on December 30, 1970, and March 29, 1971, respec tively, should be construed as ‘sums paid in advance under Chapter XVII-C’ within the meaning of the Explanation to cl. (i) of the said section ?”

2. The reference relates to the asst. yr. 1971-72.

3. The dispute is about the payment of advance tax and liability to pay penalty for failure of payment of advance tax. The Tribunal has found that the assessee had made payments of advance tax on December 30, 1970, and March 29, 1971. The contention of the Department before the Tribunal was that the accounting year of the assessee ended on the day of Diwali and, therefore, advance tax for the asst. yr. 1971-72 was payable by the assessee on June 15, 1970, September 15, 1970, and December 15, 1970. The assessee, however, made payments as under :

4. The payments made on March 31, 1970, and October 20, 1970, were before the expiry of the date of the last instalment. Only those payments could be treated as payments of advance tax.

5. The Tribunal ultimately held : “We are unable to accept that the amounts paid by the assessee on December 30, 1970, and March 29, 1971, were not payments of advance-tax. The payments were no doubt a bit delayed but the fact will not change the character of these payments. The Explanation to s. 271(1)(i), which defines ‘assessed tax’ reads as under : Explanation.-In this clause, ‘assessed tax’ means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C ;”.

6. There is no warrant for the interpretation that any amount paid after the date on which the last instalment of advance tax was payable will not be an amount paid in advance under Chapter XVIIC of the Act. s. 211 of the Act, reliance on which was placed by Shri Chakraborty, only lays down the dates on which the advance tax instalments are required to be paid. There is nothing in this section to suggest that any payment made after the last of these dates will cease to be payment of advance tax. This section, as pointed out by Shri Singh, says that the advance tax shall be payable on the dates mentioned in the section. The argument adopted by the Department, if accepted, may even mean that payments made before those dates (and not on these dates) will not be payments of advance tax. The argument is plainly illogical. All the payments were made by the assessee within the financial year 1970-71 and long before the filing of the return. All these payments were, therefore, payments of advance tax and the assessee was clearly entitled to credit of these payments while determining the amount of assessed tax for calculating the amount of penalty leviable under s. 271(1)(a) of the Act. In the demand notice issued to the assessee, the entire amount paid was treated as advance tax paid (and in our opinion rightly) from the tax found payable by the assessee. We, therefore, see nothing wrong in the direction of the AAC asking the ITO to give full credit for the amount paid by the assessee under s. 210 while computing the amount of penalty under s. 271(1)(a). It has not been shown how the Tribunal has committed any error of law in coming to its decision. In our view, the Tribunal has reached a correct conclusion in the matter.

The question is, therefore, answered in the affirmative and in favour of the assessee. There will be no order as to costs.

BHAGABATI PRASAD BANERJEE J.

I agree.

Income-tax Reference No. 406 of 1979 : This case is an offshoot of the earlier reference bearing No. 379 of 1979 which has been disposed of today.

2. The Tribunal held that the two amounts paid on March 31, 1970, and October 20, 1970, were to be, treated as payment of advance tax under Chapter XVII-C of the IT Act, 1961, and those amounts were, therefore, liable to be considered as payment of advance tax. The dispute in this case is about the amount of penalty directed to be levied by the AAC. The Tribunal says that the amount appears to be reasonable and there is nothing before the Tribunal to suggest that higher penalty should be levied. On behalf of the Revenue, nothing has been shown which could induce the Court to come to a contrary decision or to come to a finding that the decision of the Tribunal is erroneous.

4. The following question of law has been referred to us by the Tribunal : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that in computing the penalty leviable under s. 273(a) of the IT Act, 1961, the two sums of Rs. 8,433 each paid on December 30, 1970, and March 29, 1971, respec-tively, should be construed as taxes actually paid during the financial year immediately preceding the assessment year under the provisions of Chapter XVII-C, within the meaning of cl. (i) of the said section ?”

5. This question relates to the asst. yr. 1971-72. We answer the question in the affirmative and in favour of the assessee.

BHAGABATI PRASAD BANERJEE, J. :

I agree.

[Citation : 186 ITR 400]